Finance Committee on May 2nd, 2022

[Miodrag Jovanovic]

You're referring to the select luxury items tax act. As I previously mentioned, we don't have a specific estimate. We believe that with the way the measure has been designed so that it really targets the top higher end of luxury vehicles, boats and aircraft, the impact would be reasonable.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Stewart.

I see that the minister has arrived. She's in the room.

We are going to go to the Liberals.

MP Chatel, you have one question for officials, and then we'll move to the minister.

Thank you.

[Sophie Chatel, Liberal, Pontiac, QC]

Would it be possible to provide some context for the settlement with Australia that resulted in the repeal of the excise tax exemption for Canadian wineries?

[Miodrag Jovanovic]

Bill C‑19 would repeal the current exemption, and that's the result of an agreement reached in 2018 in response to a complaint that Australia filed with the World Trade Organization. The agreement stipulated that the exemption would be repealed by the end of June of that year. The proposal was to repeal it for products made and packaged as of that date. In return, Agriculture and Agri-Food Canada introduced a two-year $101 million program.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Chatel.

I want to thank the officials on behalf of the finance committee. Thank you very much for coming before us. I know that members had many questions, and there is some follow-up information that I'm sure the officials will be looking to gather to be able to provide to this committee, to the members, so thank you very much.

You are free to go on with your day, and have a great day.

[Nicholas Leswick]

There will be a few of us who will stay at the table while the minister is giving her testimony.

[The Chair, Liberal, Peter Fonseca]

Oh, you will be staying. All right. Great.

Now we have our minister with us. Welcome to the Honourable Chrystia Freeland, our Deputy Prime Minister and Minister of Finance. Thank you for coming before our committee, Minister.

You have an opportunity now for opening remarks and then to receive questions from members, so thank you very much for joining us here today.

The floor is yours.

[Chrystia Freeland, Liberal, Deputy Prime Minister and Minister of Finance]

Mr. Chair and members of the committee, thank you very much for inviting me to speak to Bill C‑19, Budget Implementation Act, 2022, No. 1.

I apologize for joining you virtually. I was supposed to be with you in person, but my flight was cancelled this morning as a result of fog in Toronto.

The budget I tabled last month was published during Canada's quick and remarkable recovery from the recession caused by COVID‑19. Canada has experienced one of the fastest employment recoveries in the G7. We've recovered 115% of the jobs we lost during those terrible first months. By comparison, the United States has recovered only 93% of lost jobs.

More than three million jobs have been created or recovered, and our unemployment rate has fallen to 5.3%, its lowest point since we began collecting comparable data nearly 5 decades ago. Our real GDP is 1.5% higher than it was before the pandemic. According to the International Monetary Fund, the IMF, Canada will have the strongest economic growth of all the G7 countries this year and in 2023.

I have some good news: last Thursday, S&P once again confirmed Canada's AAA credit rating. We owe that in part to the emergency support measures we put in place to keep Canadians and the Canadian economy afloat. We also owe it to the remarkable courage and determination Canadians have shown in the past two years.

But we still do have challenges ahead.

Inflation, a global phenomenon, is making things more expensive in Canada too. Snarled supply chains have driven prices higher at the checkout counter. Buying a house is out of reach for far too many Canadians. Russia's illegal and barbaric invasion of Ukraine is directly contributing to higher food and energy prices both here at home and around the world. This impact is hitting the most vulnerable the hardest.

We need to do better as a country at innovating and encouraging small businesses to grow. We need to continue to address the existential threat of climate change, which is why, with the investments outlined in this budget and through Bill C-19, our government is focused on growing our economy and making life more affordable for Canadians.

One of the pillars of our plan is investing in the backbone of a strong and growing country, our people. People need homes in which to live, but Canada simply does not have enough of them.

This budget represents the most ambitious plan that a federal government has ever put forward to tackle that fundamental issue, and it will put Canada on a path to double the number of new homes we will build over the next 10 years.

We also need to make the housing market fairer, which is why, for example, Bill C-19 will legislate a two-year ban on foreign investors. Homes need to be for Canadian families to live in. They cannot be a speculative asset class.

We will also make all assignment sales of newly constructed or renovated housing taxable for GST and HST purposes.

As well—and this is something that I know members of this committee care about deeply—Bill C-19 will help seniors and people with disabilities live and age at home by doubling the home accessibility tax credit's annual limit to $20,000, which will make upgrades such as wheelchair ramps more affordable.

A country and a growing economy also require an expanding labour force. Thanks to Bill C‑19, we'll be making it easier for skilled immigrants, whom our economy needs, to settle in Canada. This will help increase the government's ability to select candidates from the express entry system pool who meet the needs of Canadian businesses.

We will also be investing in the talented and determined workers who are already here and making it more affordable for specialized tradespersons to move here and find jobs.

Under the bill, we propose to establish a labour mobility deduction to enable tradespersons to relocate temporarily to a work location.This measure will grant tax deductions of up to $4,000 per year for transportation and temporary relocation expenses in an effort to reduce labour shortages in the specialized trades.

Bill C-19 will also continue our government's work to ensure that we have a robust tax system in which everyone pays their fair share. Through this legislation, our government will speed up the creation of a public registry of federally incorporated corporations to happen before the end of 2023, two years earlier than planned, to help counter illegal activity, including money laundering, corruption and tax evasion. Let me point out that this is only a first step.

This work is particularly pressing as Canada works hard with our allies through the new Russian Elites, Proxies, and Oligarchs Task Force to target the global assets of Russia's elites and those who act on their behalf.

This brings me to how Bill C-19 will allow the government to cause the forfeiture and disposal of assets held by sanctioned people and entities and to use the proceeds to help the people of Ukraine. Canada is leading the way on this effort as part of a group of allies. We would be the first member of the G7 to take this important step, and I can think of few better ways to pay for the very expensive rebuilding of Ukraine than with the seized assets of Russia's leaders.

To save time, I will quickly state some of the other measures set forth in Bill C‑19. I'm certain these measures will be supported by the members of this committee and my colleagues in the House.

Bill C‑19 provides for the introduction of a tax on luxury motor vehicles, aircraft and boats.

It proposes a tax cut for businesses engaged in zero-emission manufacturing activities.

It will also entitle employees to 10 days of medical leave in certain sectors such as air, rail, road and marine transportation, as well as banking, postal and delivery services.

It will put money back into the pockets of Canadians even more—

[Adam Chambers, Conservative, Simcoe North, ON]

I have a point of order, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

There is a point of order.

[Adam Chambers, Conservative, Simcoe North, ON]

I'm sorry, Deputy Prime Minister, and Mr. Chair, but there's an expectation at the committee that if someone is appearing for two hours, there's a 10-minute opening statement. That's what we've gone with.

[The Chair, Liberal, Peter Fonseca]

The minister has—

[Adam Chambers, Conservative, Simcoe North, ON]

I would love to have the minister come back for more time, and I'm sure we can talk about that later, but now we have less than 50 minutes or so left for questions.

[The Chair, Liberal, Peter Fonseca]

I'm sure the minister is close to concluding her opening remarks. We want to hear from the minister with her opening remarks, and we were just at eight minutes.

Minister Freeland, you have the floor.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Thank you very much. My clock says it's 12:08 and I am coming to a conclusion.

It will put money back in the pockets of Canadians even more often by changing the frequency of the climate action incentive payment. The payment will now be paid every three months instead of once a year at tax time.

Lastly, the bill will help the provinces and territories clear their surgery backlogs by providing an additional $2 billion to the Canada Health Transfer.

Mr. Chair, Bill C-19 will make a real difference in the lives of Canadians. It will help to grow our economy, it will create good jobs, and it will help us to continue building a Canada where nobody is left behind.

I hope that all honourable members here will support its swift passage through the House in the weeks to come.

Thank you very much.

Let me just thank the finance officials who are with you there. They have worked so hard on this budget, on supporting Canadians, and I'm grateful to them for their presence today.

I'm happy to answer your questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, Minister Freeland.

One thing I can say for our committee, and for all parliamentarians and Canadians, is that we stand with Ukraine. It was great to hear those remarks.

We are going to move into our rounds of questions.

We're starting with the Conservatives, and I have MP Fast up for five minutes.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you, Mr. Chair.

Thank you, Minister, for appearing virtually. I wish we had you here in person, and hopefully you'll come back for another hour before we finish our study on the BIA.

My first question is, when will the budget be balanced going forward?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Mr. Chair and Mr. Fast, let me point out that one of the strengths of this budget is the clear fiscal responsibility, with declining debt-to-GDP ratio and declining deficits. As I pointed out in my opening remarks, S&P on Thursday reaffirmed Canada's AAA credit rating. It doesn't get better than that.

[Ed Fast, Conservative, Abbotsford, BC]

Well, Minister, I didn't ask about the credit rating, and you know that. I asked you a very specific question: when will the budget be balanced? I'll give you a break. Is it in the short term, medium term or long term? Just give us an answer. I know we've asked you this question before. You are the finance minister. You should have an answer to that.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Mr. Fast, I gave a very clear answer on the issue that is important to Canadians, which is to be assured that this budget presents, as it does, a clear and responsible fiscal track. That is indicated by the fact that the debt-to-GDP ratio is steadily declining. By a steadily declining deficit, we have the lowest debt-to-GDP ratio in the G7. Let me reaffirm here, S&P—

[Ed Fast, Conservative, Abbotsford, BC]

So you have no answer.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

—a ratings agency that is paid to determine the fiscal responsibility of countries, reaffirmed our AAA credit rating. That's what should matter to Canadians.

[Ed Fast, Conservative, Abbotsford, BC]

The question wasn't on the credit rating. You know that.

I'll go to my next question.

In an earlier mandate letter from the Prime Minister to you, you were very specifically instructed not to engage in any new permanent spending. Since then, the economy has improved, government revenues have improved, and yet you have engaged in new permanent spending programs. Why?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Mr. Fast, I'm glad to hear an acknowledgement of the fact that the Canadian economy has gotten stronger and therefore federal revenues have gotten stronger. That is absolutely the case and is, again as I said, reflected in our strong credit rating.

What our government believes in is a responsible fiscal path, which we have absolutely demonstrated in this budget, and also making the necessary investments in Canadians which strengthen our economy. One of those, let me point out, is early learning and child care. We now have deals with all provinces and territories. This is particularly valuable today as Canada faces labour force shortages.

[The Chair, Liberal, Peter Fonseca]

MP Fast, you still have two minutes.